Investments | Death or Glory

I bought shares on the stock market a few years ago because I thought there would be a take over bid on a company. There was and I thought I was going to make money, until a large investor blocked the bid. That investor lost a fortune and I didn’t do too well. You pay to learn and now I have got my money back and then some.

Last year I started writing about investments on my WordPress blog. I started by telling readers that I was buying Premier Foods at 4p a share, this share was later described as a ‘death or glory’ share. The company would either do good or go bust! The share price went to 18p! Wow, I was doing well. Then the company did a share swap, 1 new share for 10 shares and the price started to drop. God save us from experts! The shares that looked cheap at 18p went to 1.70 and didn’t look so cheap. I suspect there was a lot of profit taking. They dropped to less than 80p, I was disappointed, but they were still double what I paid. An announcement this week sent them up to 90p, their plans to sell off brands that aren’t core brands has gone reasonably well. It’s a year since I bought these shares and I expected them to go to 12p or 1.20 now they are 10 X more valuable. I think they are still under-priced at 90p. I think they could double in price by this time next year.

If you compare this company with a nice blue chip like Associated British Foods (ABF), that is solid and has seen gains on it’s share price of over 30% since last year. This is no ‘death or glory’ share, this is solid as a rock. This is a safe haven investment that people have piled into. What will happen when the economy really comes out of recession? Will the fund managers seeing Premier Foods shooting up, sell safe havens like ABF in favour of PFD?

This makes me think about all the ‘death or glory’ shares and compare then with the big blue chip shares. How do you identify a safe haven blue chip anyway? They seem to be the ones investors have piled into in the past few years. The ‘death or glory’ shares are easier to spot. HMV is at 2.66p at the time of writing, that looks like ‘death or glory’ to me. They are in the ecommerce market and so it could be glory. They could be worth watching.

I also bought the banks that had troubles last year. Lloyds Banking Group was at around 29p and they have been headed for ‘glory’ and have gone up to 41.51p today. I also have a punt on Royal Bank of Scotland, which still looks risky. They were quite different having got into trouble for different reasons, but they had significant assets including Direct Line Insurance. That has been the subject of an IPO recently, raising some capital for RBS. My RBS shares are making a 0.61% loss after a year, but they have been in positive territory this week. They are 282.3 today, they were subject to a 1 share for 10 swap just like Premier Foods. That didn’t help the share price. I think we can expect RBS to go to £5.00 a share and higher, if it is run properly and bonuses are kept under control. I think Lloyds will do better and go to 60p or more in the short term.

Are there more ‘death or glory’ shares to watch? Yes, lots of them! I’m watching a few on the AIM market, especially small oil companies. I think Thomas Cook will come back too, their shares are trading at 22p today.

I hope you understand why I think the ‘death or glory’ shares are worth looking at. This is just my opinion and in no way advice to invest. They could all be death and no glory, so beware this strategy. The three shares together are up 45% in a year for me, but that is no guarantee of future success. Personally, I like a little excitement. I shall be wondering which companies will benefit from the Christmas season…

There are more logs to read on the home page of a zillion ideas, please comment if you have a good idea. Suggestions and questions welcome…